RBS Market Data

Royal Bank of Scotland said yesterday that it planned to lose 9,000 jobs, half of them in Britain, on top of the 2,700 it has already cut here this year.

The announcement came hours after it was confirmed that the Government’s stake in the bank had risen from 58 per cent to 70 per cent.

It is the biggest cull in a day since BT announced last November that it was cutting its workforce by 10,000.

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Insiders say today's moves have been inevitable since well before the critical decision to recapitalise the banks

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It is understood that RBS staff will not be able to follow their former chief executive Sir Fred Goodwin in taking pensions early but will instead have to accept standard redundancy terms. Sir Fred, 50, draws a pension of £703,000 a year.

Last night it emerged that UKFI, which manages the taxpayer’s stake in RBS, had been aware of its plan to restructure. RBS is understood to have given UKFI a “courtesy call” yesterday to spell out the details.

The main union, Unite, said that the Government should be protecting jobs. Rob MacGregor said: “These employees are blameless for the position RBS is in, yet they are paying for the mistakes at the top of the bank. This bank, which is majority-owned by the taxpayer, must not be allowed to shed jobs and leave people on the dole.”

Vince Cable, the Liberal Democrat Shadow Chancellor, said: “As he enjoys his multimillion-pound pension, Sir Fred Goodwin should spare a thought for the thousands of people he has now put out of work.”

The news comes as figures suggest that the unemployment rate is rising faster than in previous recessions. The number of people seeking jobseeker’s allowance rose by 138,400 during February and the figures for March are expected to be equally bad. In the past two weeks HSBC announced plans to cut 6,100 jobs, including 1,200 in Britain, while the insurance firm Aviva, the owner of Norwich Union, said that it planned to cut 1,700 posts.

RBS said that the positions to be cut were in back-office functions in “manufacturing” — such as document processing, IT, property and buying. Call-centre staff would also be affected. Edinburgh, Manchester, Bristol and London are expected to be worst hit. RBS employs 5,500 people in manufacturing in Scotland, mostly in Edinburgh. Many of the job cuts are expected to be in the NatWest division.

Stephen Hester, the chief executive of RBS, insisted that the actual number of British jobs lost would be “significantly lower” than 4,500 because of natural turnover and less use of agency staff. He said that 650 job opportunities elsewhere in the bank had already been identified. He hoped that all redundancies would be voluntary.

He added that the move would help RBS to cut its annual costs by £2.5 billion within three years. “We have set a new strategy for RBS to restore the bank to standalone strength as soon as practicable. From this we want the Government to be able to realise value from its investment. To do so we need to cut our costs, as in all businesses, given the current recession. Unfortunately, that means taking difficult decisions about jobs.”

City analysts warned that, with staff accounting for about 60 per cent of the RBS cost base, more job cuts were likely. One source said: “This is only the beginning. This is the first in what is going to be a series of announcements. This is an organisation which is going to go through a very serious contraction. It is going to be similar to what the insurance industry went through in the early and mid-1990s, when companies like Royal Insurance had to lay off thousands of people as an alternative to going out of business. What we are talking about here is the ‘low-hanging fruit’ in cost-saving terms. They will have to go further up the organisation in due course.”

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